Business World, 29 January 2013


As “authorizers” of the national budget, one would expect that senators and congressmen would be the paragon of openness, fiscal responsibility and accountability. Apparently they’re not. They’re guilty of fiscal profligacy. They have enlarged their own budgets, contrary to the intent of the Philippine Constitution, and disbursed public funds under a different set of rules than what applies to officers of other government agencies.

I hope that with the Senate budget fiasco, the CoA would exercise its constitutional duty to examine, scrutinize and audit the use of public funds, regardless as the spending authority.

The Constitution provides the CoA broad powers: “the power, authority, and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by or pertaining to, the government or any of its subdivisions, agencies, or instrumentalities, including government-owned or -controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or -controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit such audit or as a condition of subsidy or equity.”

Right now, a big chunk of the congressional budgets does not undergo careful state audit. While the CoA, in recent years, has done an excellent job in scrutinizing, analyzing and auditing agency budgets in the Executive Department, it has been lax in its audit of congressional spending.

In practice, the maintenance and other operating expenses (MOOE) released to individual senators (and congressmen) are perfunctorily passed in audit by the CoA, and without detailed proof of actual use. The strict and thorough audit rules that apply to most government agencies do not apply to Congress. A legislator would simply certify, on his honor, that he has used the funds released to him in accordance with the purpose of the release. And that would be enough.

From the beginning, the Senate has disregarded fiscal rules enshrined in the Constitution. The Philippine Constitution provides: “The Congress may not increase the appropriations recommended by the President for the operations of the Government as specified in the budget.” So why did the Senate majority chose to increase their own budget in 2013? The Senate budget fiasco provides the answer.

In 2013, the President submitted a 2.961-billion budget for the Senate. But what the Senate authorized, and the President approved, was 3.294 billion, 333 million or 11.2% higher than what the President proposed.

And for the MOOE of the Senate, the President proposed 1.391 billion. Congress authorized, and the President agreed, 1.578 billion, 187 million or 13.4% higher.

Instead of exercising their duty to cut, or at least maintain, the budget as proposed by the President, the Senate majority have chosen to help themselves and increased the Senate budget.

How much MOOE each senator will receive this year will have to be decided by the Senate President in coordination with the Senate committee on accounts.

But how the funds were actually disbursed in 2010 could give some indications. In 2010, the Philippine Senate had a total new appropriations of 2.620 billion, of which 1.376 billion, or more than half, was for maintenance and other operating expenses (MOOE). But actual MOOE was 1.452 billion, or 76 million higher than planned.

Even then actual disbursements for MOOE were higher than planned. So that’s the first lesson: MOOE can be augmented. In 2010, it was augmented and there’s not reason why it can’t be augmented in future years.

The augmented 1.452-billion MOOE is divided into three major parts: MOOE for general administration and support services (579,584,000), MOOE for legislative services (586,556,000), and the MOOE for locally funded projects, largely operational requirements of various oversight committees, (209,898,000).

Here’s the breakdown for the 1.452 billion:

Obviously, these are large amounts. They are mind-boggling for the ordinary man on the street. That’s 60.5 million per senator. The order of magnitude is indicative of how profligate our senators have been. And what do they have to show in terms of laws passed or revised? By the way, this does not include yet their ‘pork barrel’ funds — around 200 million per year or 1.2 billion for a six-year term.

By the way, one can reasonably assume that what’s happening in the Senate is happening in the House of Representatives, too. And if the Commission on Audit (CoA) is less assertive in its audit of Senate disbursements, it is equally lax in its audit of the House’s spending. Lax audit rules lead to wasteful spending.

Fiscal rationality and responsibility should be restored. When taxes are extracted from citizens, their economic welfare is reduced. But part of what was lost is offset if the government gives back to citizens services that reflect individual preferences.

The role of Congress is to authorize public spending for programs and activities that benefit individuals and society — efficiently and economically. The role of the CoA is to ensure that appropriations authorized by Congress are spent according to strict budget rules that apply equally to all — to the President, the bureaucrats, and to members of Congress.